But Mr Gray, a former Woodside Petroleum executive who has held his job for two months, said over-the-top union demands and the ambitious size of Queensland and West Austra­lian gas plants were driving up costs.

“We have to be conscious that unreasonable wage demands place pressures on projects,” he said at the Australian Petroleum Production & Exploration Association’s annual conference in Brisbane. “Nowhere else in the world has anyone attempted the kind of ramp-up of LNG that we have in ­prospect in Australia.”

Mr Gray, a former national secretary of the Labor Party, said his comments were not “anti-union” but any pay rises had to improve productivity too – and big increases pushed through by the Maritime Union of Australia in West Australia did not.

His predecessor in the resources and energy portfolio, Martin Ferguson, was also critical of the direction of union leadership and their wage demands. Other ministers, including Workplace Relations Minister Bill Shorten, support the Maritime Union’s wages push.

Mr Albanese said energy companies wanted a return to Work Choices.

“Would lower wages mean more profits? Yes they would, but have a look at the facts: seven of the world’s 12 ­largest LNG projects are right here in Australia, right now,” he told Sky News.

“If he thinks that’s the way we remain internationally competitive, he’s on his own,” he said after speaking at the gas conference.

Accusation of ‘ratcheting’

Major gas companies said Australia was not only the most expensive place to recruit, but unions also insisted on “ratcheting” – demanding additional conditions in the agreement that were more generous than exactly the same worker at another site.

As well as being paid between $200,000 and $500,000 a year, some get paid extra for just appearing for work which is known as a “Madonna bonus”.

“This is the most expensive place for us to hire by between 30 and 50 per cent compared to a global average. It has now reached breaking point,” one chief executive said.

When company chiefs begin negotiating a new workplace agreement, they expect a list of demands from unions that they have to meet or be unable to find staff in a skills-poor labour market.

Energy companies say Australia needs to reduce its labour costs, which are among the world’s most expensive, cut regulation and deliver a stable tax and political ­environment to compete against east Africa, west Canada and the US, which is preparing to export gas.

Maritime Union of Australia WA secretary Chris Cain lashed out at Mr Gray, saying he had not once spoken to the resources minister about the union’s employment claims.

“Gary Gray should pick up the phone and find out what the union demands are, not sit and talk to the companies,” he said.

“No one works the hours we do. We can work a 12-hour day, but up to 14 hours. We are away more than six months of the year. We don’t see our families on Christmas Day or Boxing Day. If you are working 100 hours a week, what more do they want? How many more hours do they want?”

Woodside chief hits at cost blow-outs

Australian Manufacturing Workers Union West Australian state secretary Steve McCartney said gas executives were trying to “bully” workers into accepting lower wages to cover their own mismanagement.

“The reality is wage increases in oil and gas constructions have averaged about 5 per cent per year for the last ­decade. It’s hardly exorbitant or unpredictable,” he said.

“Maybe if the bosses had their huge remuneration packages better linked to their own productivity we’d see better results on project costs.”

“We are fortunate to live in a country where we can pay good competitive salaries. But it’s also a question of how we design, construct and service projects as well as productivity in the work place,” he said.

“We are learning or effectively re-learning that Australia is logistically challenged and dealing with that is ­critical to improving productivity. The wage structure we have compounds that, including the way we run rosters.

“We can be a high-cost country but we need to bring our best game.”

Peter Voser, the global chief executive of Royal Dutch Shell, said Australia needed to find the right mix of regulation and tax policies to make the most of its potential in natural gas.

He said prioritising education and improving collaboration are vital to reduce costs.

“The policy decisions made today will have a profound effect on your economy and society,” he told the ­conference.

Macfarlane fears loss of international investors

“By embracing innovation, partnership and collaboration, this nation will ensure it has a critical role to play for decades to come in meeting the world’s energy challenge.”

The conference heard from company executives who implored the industry to stand up to what they described as misinformation about the coal seam gas industry by environmental groups.

Mr Macfarlane, the Coalition spokesman, said cost blow-outs in Queensland and wildcat strikes in Western Australia were turning international investors off Australia.

“If it’s costing twice as much to do a project here as it is somewhere else in the world we’re not being competitive,” he said.

“I’m quite openly saying we will not see another greenfield on-shore LNG plant in Australia in the next ­decade if we don’t address our productivity. In the future, LNG will be brownfield and floaters [off-shore projects] and I don’t think that’s optimal.”

Mr Gray, who announced new areas of off-shore waters to be opened for petroleum exploration, accused environmental activists of aiming to spread “fear and confusion” about the coal seam gas industry rather than improving regulation to protect the environment. He urged industry to unite to put ­forward its case with “vigour and courage” to give politicians the facts with which to tackle the activism.

NSW Resources and Energy Minister Chris Hartcher will tell the conference on Tuesday that the debate on coal seam gas was so “hysterical” it was hard to separate fact from fiction.

Mr Macfarlane said the CSG industry was a “low-ranking concern” for most households who were more concerned with the cost of living. He urged the industry to ensure “the Greens and the ALP don’t make this an election issue”, saying farmers and miners could work together to find a balance between agriculture and ­mining.

“It is a common misconception that farmers and miners are naturally at war with each other. In most cases, the opposite is true,” Mr Macfarlane said.

“We want to make sure there are no more surprises for the industry before the election.”

The government and the opposition agree with the gas producers that reserving gas for domestic use was not a good idea.

Mr Macfarlane said despite concerns about rising gas prices, there was no need for domestic gas reservations in Queensland or NSW.